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Weak retail sales point to slowdown in US consumer spending

New US economic figures point to some loss of momentum in the economy early in the third quarter

US retail sales unexpectedly stalled in July, pointing to some loss of momentum in the economy early in the third quarter.

The US Commerce Department said that retail sales, which had increased 0.2% in June, were held back by a second month of declines in receipts at car dealers in a row, as well as weak sales of furniture and electronics and appliances.

July's reading was the weakest since January. Economists had forecast retail sales, which account for a third of consumer spending, increasing 0.2% last month.

The weak sales report, which is at odds with data on employment, manufacturing and services sectors that have suggested the economy was growing solidly, could see the Federal Reserve in no rush to start raising interest rates.

The Fed has kept its benchmark overnight interest rate near zero since December 2008, citing weak wage growth among other concerns.

"Core sales", which strip out cars, petrol, building materials and food services, and correspond most closely with the consumer spending component of gross domestic product, edged up 0.1% in July. That suggested a moderation in consumer spending early in the third quarter.

The retail sales report, which was generally weak, suggested third-quarter growth will probably pull back after the second quarter's brisk 4% annualised rate.

Breaking down the figures, they show that receipts at car dealerships fell 0.2% in July after declining 0.3% the previous month. Sales at non-store retailers, which include online sales, slipped 0.1%. Sales at clothing retailers rose 0.4% and receipts at sporting goods shops gained 0.2%.

Today's figures also showed that sales at electronics and appliances stores fell 0.1%, while receipts at building materials and garden equipment suppliers increased by 0.2%.